Tesla management are trying to decide whether to keep an older piece of machinery or buy...
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Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement Management was presented with the following information to assist in their decision • The old machine was purchased three years ago for $312,000 and has a current book value using straight-line depreciation of $193,000 • The old machine incurs operating expenses of $38,000 per year. • The current disposal value of the old machine is $79,000, if it is kept ten more years, its remaining value would be $16,000 •The replacement machine would cost $229,000 and have a useful life of ten years. • The replacement machine has an expected salvage value of $67,000 after ten years. •The replacement machine would require $12,000 per year in operating expenses. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Total costs Should the old machine be replaced? Purchase New Machine www Mant Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement Management was presented with the following information to assist in their decision • The old machine was purchased three years ago for $312,000 and has a current book value using straight-line depreciation of $193,000 • The old machine incurs operating expenses of $38,000 per year. • The current disposal value of the old machine is $79,000, if it is kept ten more years, its remaining value would be $16,000 •The replacement machine would cost $229,000 and have a useful life of ten years. • The replacement machine has an expected salvage value of $67,000 after ten years. •The replacement machine would require $12,000 per year in operating expenses. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Total costs Should the old machine be replaced? Purchase New Machine www Mant
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Answer rating: 100% (QA)
Solution Total costs in both options and decision for the same is as under Purchase price of New Mac... View the full answer
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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